Downtrend Resumes

By Cassie Fish, http://cassandrafish.com

After a two day rally back to the 10-day moving average, the downtrend in CME cattle futures has definitely resumed. Wednesday’s close was lousy and today’s close was worse. A test of last week’s critical lows appears imminent. To put it simply, the cattle futures market acts terrible.

Over 40k contracts of open interest has been sucked our live cattle futures since February 23 or about 11 percent. Managed funds are likely liquidating longs and increasing short.

Corn resumed its rally today and sent feeder cattle futures hurtling lower yet again too. April feeders gapping lower this morning and posting the lowest close for the move so far.

Negotiated cash trade slowed to a trickle today, with one major still willing to take limited numbers at $219 dressed, though most cattle sold this week for $220 dressed. As of this morning, 72k head had traded.

At least the daily estimated slaughter has been solid this week, totaling 499k week-to-date, up 6k from a week ago and 17k from a year ago. Even with a plant dark tomorrow and Saturday for cooler cleaning, this week’s throughput is solid.

Boxed beef values have bottomed, printing up over a buck today, making the likelihood that packer margins bottomed last week seasonally at around $250 net profitable.

The USDA carcass weights were reported today and steer carcass weights dropped 3 pounds back down to 918 pounds, equaling the low for this year so far. Weights will decline seasonally until May, though they continue to be reported at a record week after week thanks to a dry winter in the north and outstanding feedyard performance.

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